Dollar ends mixed in New York session after downbeat GDP data: February 2, 2015

Market Review - 31/01/2015 03:01GMT 
 
Dollar ends mixed in New York session after downbeat GDP data

The greenback retreated against other major currencies on the last trading day of January after the release of tepid U.S. economic reports.

Versus the Japanese yen, despite a brief bounce to 118.46 in Australia on Friday, renewed selling below Thursday's New York high capped intra-day gain there and price subsequently fall to 117.89 in Asia. Later, dollar ratcheted lower in Europe and fell to 117.30 in New York morning before moving sideways as fall in U.S. and major European stock markets triggered risk aversion buying in yen.

On the data front, the Commerce Department said U.S. GDP expanded at a 2.6% annual pace after the third quarter's spectacular 5% rate due to weak business spending. Meanwhile, the Labor Department showed U.S. Employment Cost Index increased 0.6% in the last quarter of 2014 after an unrevised 0.7% gain in the third quarter. In a separate report, official data showed U.S. consumer spending rose at a 4.3% pace in the fourth quarter, which was the fastest since the first quarter of 2006. Later, The University of Michigan said its consumer sentiment index ticked down to 98.1 in January from 98.2 the previous month.

The single currency moved in a choppy fashion against the U.S. dollar in Asia and Europe, price edged higher from Australia's low of 1.1317 to 1.1353 in European morning and then tanked to 1.1304. Later, investors shrugged off the release of weak euro zone inflation data and pushed price marginally higher to 1.1364 on improved euro zone unemployment rate and comments from EU Commissioner Katainen before falling to a fresh intra-day low of 1.1279 in New York.

EU Commission Vice President Jyrki Katainen said on Friday urged Greece's new government to stick to the reforms agreed with international lenders. He said 'expects Greece to fulfill bailout commitments, does not rule out extending deadlines.'

Eurostat reported that the euro zone's unemployment rate ticked down to 11.4% in December from 11.5% the previous month, confounding expectations for the rate to remain unchanged. In a separate report, Eurostat said that the annual rate of euro zone inflation fell by 0.6% in January, after a 0.2% slip in December, market had expected an annual decline of 0.5%. Core inflation rose 0.5% on a year-over-year basis.

Cable weakened against the greenback on Friday. Despite choppy sideways move after a rebound from 1.5051 to 1.5095 in early Europe, price fell to 1.4989 in New York morning before recovering.

In other news, Eurogroup Head Dijsselbloem said on Friday, 'had constructive meeting with Greek FinMin; purpose of my visit was to explain requirements of our agreement; we want Greece to regain economic independence; taking unilateral steps is not the way forward; it is important not to lose progress made these years in Greece; it is up to Greek gov't to determine its position, then we can move jointly forward; we agreed programme has been extended.'

Data to be release this week:

Japan's Manufacturing PMI, China HSBC Manufacturing PMI, Switzerland's Markit/ADACI Manufacturing PMI, euro zone Manufacturing PMI, UK's Markit/CIPS Manufacturing PMI, U.S.'s PCE Price index, Personal consumption, Personal Spending, Markit Manufacturing PMI, Construction Spending, ISM Manufacturing PMI, and Canada RBC Manufacturing PMI on Monday.

Australia Trade Balance, Exports, Imports, Bulling Approvals, RBA rate decision and monetary policy statement, Switzerland's Trade Balance, UK's Markit/CIPS Construction PMI, Italy's CPI, euro zone Producer Prices, Canada Producer Prices, U.S> Redbook, Factory orders on Tuesday.

New Zealand's HLFS Job Growth, HLFS Unemployment rate, Labour Cost Index, China HSBC Service PMI, Italy's Markit/ADACI Service PMI, France's Markit Service PMI, Germany Markit Service PMI, euro zone's Markit Service PMI, Retail Sales, U.S. ADP National Employment, Markit Service PMI, ISM non-Manufacturing PMI, Canada Ivey PMI on Wednesday.

Australia's HIA New Home Sales, Retail Sales, Switzerland's Consumer Confidence, Germany's Industrial Orders, UK's BoE rate decision and QE Total, U.S.'s International Trade, Labour Costs, Initial Jobless Claims, Canada Trade Balance, Exports, Imports on Thursday.

Japan's Coincident Indicator, Leading Indicator, Germany's Industrial Output, France Budget Balance, Trade Balance, Exports, Imports, Switzerland's Retail Sales, UK's trade Balance, U.S.'s Average Earnings, Unemployment Rate, Non-Farm Payroll, Canada's Unemployment rate, Unemployment Change, Building Permits on Friday.